A Note on the Persistence of Firms ' Innovation Behavior: A Dynamic Random Effect Probit Model Approach

Abstract

Is firms ' innovation behavior persistent? Using both patent and RDintensity as proxy variables of innovation and employing a new estimation method of the dynamic random effect probit model, this study finds a strong effect of state dependence after controlling for the firm heterogeneity. This result indicates that there is a causal effect from past innovation to current innovation, supporting the hypothesis of persistent innovation

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